Maximising value

Iraq, where Crescent Petroleum has a rich history, has huge potential with regard to Gas Cities, as it has the opportunity to start afresh.
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The Gas Cities concept has the potential to create long-term economic stability, says Badr Jafar.

As the most prolific hydrocarbon region in the world, the Middle East has long been attempting to add value to its most vital exports. With Saudi Arabia spending vast amounts in developing its petrochemicals industry, one firm, in particular, is looking at gas as a way to earn extra revenue for regional nations.

“Most international oil companies (IOCs) go into a country to source commodities for export,” says Badr Jafar, executive director of Crescent Petroleum and executive chairman of Gas Cities, a joint venture between Crescent Petroleum and Dana Gas.

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“With natural gas that usually entails pipeline projects and LNG shipping in order to export it – once that gas molecule has reached the border, you’ve exchanged its value and that’s it.”

Jafar says that using the gas molecule within the exporting country’s borders to maximise the netback value of the gas can have an economic multiplier effect. Often, the power generation sector receives the greatest benefit, which in turn encourages added foreign direct investment, mass employment, training, education and so on.

“Natural gas is a great facilitator to build political, social and economic bridges between two countries,” continues Jafar. “I think that gas has something that oil doesn’t and that is the fact it can act like an umbilical cord between two nations, which then promotes long-term stability, as natural gas projects tend to be measured in decades not years.”

From the industrial perspective, the Crescent executive believes that one strong solution is his firm’s Gas Cities concept.

The Gas Cities Ltd joint venture company has been set up to explore the possibility of clustering various industries so that by-products and waste from one sector can then be used as feedstocks and energy for its neighbours.

“In the Gas Cities, we would like to be able to develop the gas resources ourselves, and price that feedstock according to what the industries can afford,” explains the Crescent executive. “That would incentivise an industry to be efficient, and simultaneously allow us to share in the profits of that industry.”

As an example, Jafar referred to the ammonia industry. If the price of ammonia doubles, the ammonia sector should pay more for its feedstock. “Likewise, if the commodity price falls, we go down together, because we always want to have a happy tenant – as long as we are both able to share in the good times.”

While this concept would be admittedly difficult to establish in the more mature local markets, Jafar has set his sights on potential high-growth sectors, such as Iraq.